Have you ever heard the term “Reverse Investing”?
It happens all of the time, we see it happen a lot.
It’s when an inexperienced investor buys and sells at the wrong time in the market.
They have this fixed idea that one place is “the place” to invest and won’t go anywhere else.
Like this year (2018) in Sydney. You have the market at it’s peak and yet you still see buyers coming in and wanting to buy into the market. High prices, low returns but still people think it is a good investment.
They buy at the peak of the market and find that it hasn’t gone up for the next 3 years so sell the property and say “property investment is bad”.
This is Reverse Investing.
What causes markets to peak is simply the availability of finance from the banks. If the average family across the boards can only borrow between $800,000 and $900,000 and you add a deposit on top, you hit 1.1million, that’s it, you can’t grow in price any further as very few people can get the money. It’s not rocket science, it’s just common sense.
This type of investment causes a lot of family stress as it becomes transaction buying. Every month for a number of years you collect rent and make interest payments but there is no equity growth. It’s very stressful! It’s like going on a diet and eating celery for months and at the end the scales say the same, it becomes very disheartening.
There are many property markets in Australia. It isn’t just the one market.
For us, we like Melbourne, Sydney and Brisbane. They are all different markets and they all peak at different times.
THREE INVESTMENT MISTAKE
1.Never buy into a market because of what IS there, always buy into a market because of what WILL be there.
2. Never buy property just to have property. If you are investing, buy property that will make you money. You don’t want to hold property for 2 or 3 years waiting for growth. Go to an area that will make you money in those 2 – 3 years.
3. Don’t ask someone who is not a successful property investor where to buy property, they just won’t know. They will normally gladly give you their opinion, but this “opinion” could cause you to buy in an area that has already peaked.
Property Investment can be very simple, why complicate it
- Buy in good areas at the right time.
- Buy a type of property that you know will rent well.
- Buy in an area that has plenty of room to grow in value.